The current market interest rate for one year maturity bond is 10%.The forward rate for a one year investment starting in one year from now is 8%.The forward rate for a one year investment starting in two year from now is 12%.According to the expectations theory of term structure,the shape of the yield curve between 1 year maturity and 3year maturity is:
A) descending.
B) ascending.
C) ascending then descending.
D) descending then ascending.
Correct Answer:
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Q21: The current market interest rate for one
Q22: The shape of the yield curve that
Q23: The yield curve is a plot of:
A)default
Q24: Which of the following statements is NOT
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Q27: The current market interest rate for two-year
Q28: According to the expectations theory,an upward sloping
Q29: Which of the following statements is NOT
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Q31: If investors expect higher future interest rates,the
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